Wakefield and Classical Rent Theory.

The role of the taxation of economic rents in classical economics continues to hold the interest of scholars. One lacuna in the study of classical theory concerns the development of classical rent theory, which evolved from the emigration-colonization remedy that was advocated for abating the economic ills of Great Britain of the classical era. The concern of this paper is with the specific aspect of this classical discussion of emigration and colonization, which concerned the theory, and the taxation of economic rent as the classical theory was applied to colonial conditions. For here classical thought underwent a change in emphasis, a transformation often missed by contemporaries who claimed that a substantive aspect of Ricardian theory was at issue. This change in emphasis is clearly brought out in economist Edward Gibbon Wakefield's plan of Systematic Colonization and is forcefully reflected in economist J.S. Mill's great restatement of Ricardian economics some years later. In tracing this development in Ricardian economics, this paper shall consider first the relevant aspects of Wakefield's colonization plan which concerns location rents, the fiscal importance of such rents to his scheme, and the influence this had on classical economics. The concluding section sets out to explain the failure of Ricardo to develop this aspect of his theory since it was general enough to cope with location rents in lieu of differentials in soil fertility as the most important determinant of rent.